Alpha Seeker 2.0 ETFdb Portfolio

Portfolio Strategy

The Alpha Seeker 2.0 ETFdb Portfolio is designed for investors who believe in the benefits of quantitative analysis and active management, but also want to capitalize on the benefits offered by the exchange-traded fund structure, including reduced costs, increased tax efficiency, and enhanced liquidity. The asset allocation strategy for this ETFdb Portfolio was constructed assuming investors have a relatively high risk tolerance, and are willing to make investments in asset classes beyond fixed income and equities. Instead of focusing on beta and using passively-indexed ETFs that predominantly rely on market capitalization-weighting methodologies, we selected ETFs that implement various degrees of quantitative analysis in an attempt to capture alpha.

Over the last 30 years, use of passive indexing as an investment strategy has increased significantly, as several academic studies have shown that the majority of portfolio returns are attributable not to individual stock selections, but to broad asset allocation strategies. Many investors point to the rise of the ETF industry as a clear indication of a dramatic shift in investor sentiment away from costly active management towards more cost-efficient indexing strategies. Most ETF assets are invested in passively-indexed funds that own the entire benchmark rather than attempting to select individual securities expected to outperform the broader markets.

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